CAP-I Mega Q&A: Accounting, Economics, CMS & Mercantile Law — Long Answers & Highlights (ICAN Nepal 2025) | CAP-I Exam Prep: Accounting • Economics • CMS • Mercantile Law — Extended Solutions + Hashtags | Empirical Ten: CAP-I Mega Q&A with Highlights & Student Summary (Nepal)
CAP-I Mega Q&A (New Set): Accounting · Economics · CMS · Mercantile Law
Long, exam-ready answers with key highlights and a short student task under each answer.
Q1) How do you treat common year-end adjustments in final accounts?
In finalisation, you must convert trial balance figures to an accrual-true & classification-true set of statements. That means: (i) accrue one month’s outstanding rent and salary; (ii) prepay insurance that extends into the next quarter; (iii) remove personal insurance (e.g., proprietor’s life policy) from business expenses (treat as drawings); (iv) compute interest on loans from the actual draw-down date; (v) maintain reserve for bad debts at the stated % of closing debtors; (vi) correct capital vs revenue errors (e.g., typewriter wrongly in purchases; sale of a desk wrongly in sales); and (vii) apportion expenses for assets used partly for residence (e.g., half the building). These exact adjustments are illustrated in the Bhairav Kayasta question—outstanding month’s rent & salary, life insurance drawings, loan interest from 1-May, 5% reserve on debtors, capitalisation/correction of typewriter and furniture sale, and half-residential building. :contentReference[oaicite:0]{index=0} :contentReference[oaicite:1]{index=1} :contentReference[oaicite:2]{index=2} :contentReference[oaicite:3]{index=3}
Exam tip: post-adjustment P&L should show revised insurance (business-only portion, net of prepayment), created provisions, and updated depreciation by asset class; the balance sheet should show correct reserves, accruals, and capital adjusted for drawings due to personal insurance.
Your task → Write 3–4 lines summarizing how you would explain each of the seven adjustments to a junior.
Q2) How are insurance claims for stock loss and discount reserves handled?
When stock is destroyed and the claim is admitted in full, credit the trading account with the insurer’s admitted amount and disclose any balance through closing stock/claim presentation; simultaneously, compute provisions at the given rates—e.g., 5% doubtful debts on adjusted debtors and 2% provision for discount on debtors plus 2% reserve for discount on creditors. The Atmaram illustration shows a fire-loss claim credited and the two discount reserves created alongside bad-debt adjustments and depreciation. :contentReference[oaicite:4]{index=4} :contentReference[oaicite:5]{index=5} :contentReference[oaicite:6]{index=6} :contentReference[oaicite:7]{index=7}
Why it matters: correct claim and reserve treatment keeps gross profit fair and the credit risk/settlement expectations realistic for exam-style balance sheets.
Your task → Draft a journal+T-account flow for (a) fire claim admitted in full, (b) setting 2% reserves on both sides.
Q3) Club accounting: How to prepare Bar Trading and the Income & Expenditure A/c?
For societies, separate the Bar Trading A/c to arrive at bar gross profit (adjusting opening/closing bar stock, creditors movement, and outstanding bar wages), then prepare the Income & Expenditure A/c on the accrual basis: adjust subscriptions (arrears/advance), unexpired insurance, stationery stock movement, and recognise depreciation on premises and furniture; also bring in investment income and profit on sale of investments. The Joy Social Club problem fully demonstrates this flow, including how bar creditors and outstanding wages are netted inside the bar section before transferring the bar income into the main statement. :contentReference[oaicite:8]{index=8} :contentReference[oaicite:9]{index=9}
Exam hint: keep the bar and general sections cleanly separated; all accrual/deferral tweaks hit the Income & Expenditure A/c, not the Receipts & Payments summary.
Your task → Write a one-paragraph narrative explaining why the bar results are transferred to the main I&E A/c.
Q4) Manufacturing + Trading + P&L: what are the most examined adjustments?
Start with a Manufacturing A/c: compute raw-material consumed, add factory wages, works manager salary, repairs, factory insurance, and factory-side depreciation; adjust opening/closing WIP to arrive at the cost of goods manufactured for transfer to Trading A/c. Then in Trading/P&L, handle office-side charges, royalties, selling costs, new provision for bad debts net of old reserve, and unusual notes like overcast stock correction or capitalise neon-signs within fixed assets. The Ajit Baral set shows all of these, including outstanding expenses and depreciation rates by asset. :contentReference[oaicite:10]{index=10} :contentReference[oaicite:11]{index=11} :contentReference[oaicite:12]{index=12}
Watch-outs: salaries that include advance, and family-budget-style expenses that should be capitalised (e.g., neon-signs) often appear as traps.
Your task → Sketch a three-column bridge: Manufacturing → Trading → P&L, listing which adjustments appear in each.
Q5) How is a Cost-of-Living Index computed using the family budget (weighted) method?
Select weights from a representative family budget, compute price relatives for each item (current/base × 100), multiply by weights, and take the weighted average. In the Kathmandu middle-class example, the weighted index is obtained by summing W×(P1/P0×100) over all categories and dividing by total W, concluding an increase of roughly 34.521% over the base period—an excellent model answer to emulate. :contentReference[oaicite:13]{index=13} :contentReference[oaicite:14]{index=14}
Interpretation: report not only the index level but also the percentage change over 100 to communicate real-life cost pressure.
Your task → In 3–4 lines, interpret the meaning of 134.52 as an index for households.
Q6) CMS: How do you correct the mean & standard deviation when wrong observations are found?
Adjust the sum of observations and the sum of squares for each error (subtract wrong value, add correct value) before recomputing mean (ΣX/n) and variance (Σx²/n − X̄²). The 2013 and 2009 solutions show the full working: recompute ΣX (e.g., 4500 → 4516), update ΣX² (e.g., 214600 → 215296), then derive the corrected mean and σ; if an outlier is omitted, recalc with n−1 for the reduced sample as demonstrated. :contentReference[oaicite:15]{index=15} :contentReference[oaicite:16]{index=16} :contentReference[oaicite:17]{index=17}
Template: Corrected ΣX = ΣX − wrong + right; Corrected Σx² = Σx² − wrong² + right²; then recompute X̄ and σ (or s with n−1 if sample variance is required).
Your task → Write a 3-step recipe you would follow on exam day to handle one wrong and one omitted value.
Q7) CMS: Build a Simple Aggregate Price Index (base 1991) for 1992.
List base and current prices, sum each column, then compute Index = (Σp1 / Σp0) × 100. Using wheat, rice, pulses, milk and clothing, the worked answer yields an index of ≈ 127.81, meaning prices in 1992 are about 27.8% higher than in 1991 under the simple aggregate method. :contentReference[oaicite:18]{index=18} :contentReference[oaicite:19]{index=19}
Your task → Explain in 2–3 lines when you would prefer a weighted index over simple aggregate.
Q8) CMS: How do you compute Spearman’s Rank Correlation quickly?
Rank both series, compute d = Rx − Ry, square and sum, then apply ρ = 1 − 6Σd² / [n(n²−1)]. The six-pair example (40…50 vs 110…160) provides a neat, exam-speed table with Rx, Ry, d and d² prepared for direct substitution. :contentReference[oaicite:20]{index=20} :contentReference[oaicite:21]{index=21}
Your task → In 2 lines, tell a friend what a positive ρ near 1 really means in plain English.
Q9) CMS: Mean deviation about mean (discrete frequency) — what’s the workflow?
Compute X̄ using ΣfX/Σf, form a column of |X − X̄|, then multiply by f to get Σf|X − X̄|. Finally, MDmean = Σf|X − X̄| / Σf. The five-value frequency set (5..25 with f 3..1) is a classic drill for table discipline and rounding. :contentReference[oaicite:22]{index=22}
Your task → Write a 3-step checklist for MDmean to avoid arithmetic slips.
Q10) Mercantile Law: Partnership penalties, profit-sharing when silent, and quantum meruit.
Under the Partnership Act, note the penalty provisions (e.g., compliance failures under Section 41); if the deed is silent, profits are shared equally (and, by parity of reasoning, losses too unless agreed otherwise); and when a contract is discharged mid-performance, a party who has partially performed may claim reasonable remuneration on quantum meruit under Section 85 of the Contract Act. These points are standard short-notes that appear frequently. :contentReference[oaicite:23]{index=23} :contentReference[oaicite:24]{index=24} :contentReference[oaicite:25]{index=25}
Your task → Draft 3 sentences: one each defining (a) equal profit share rule, (b) when quantum meruit applies, (c) an example penalty.
Q11) Mercantile Law: Termination of contract & exceptions to “no consideration, no contract”.
A contract may end by performance, mutual consent, supervening impossibility, lapse/expiry, or breach; and classic exceptions to the consideration rule include natural love & affection, past voluntary services, agency, and completed gifts, among others. These are staple theory prompts for 3–5 mark answers. :contentReference[oaicite:26]{index=26} :contentReference[oaicite:27]{index=27}
Your task → List two real-life examples (Nepal context) for termination due to impossibility.
Q12) Bonus: What are the time-series models used in economic analysis?
Two fundamental decompositions are examined again and again: the additive model (Y = T + S + C + R) assuming components operate independently, and the multiplicative model (Y = T × S × C × R) allowing interaction among components. Know when to use each and what every letter means (Trend, Seasonal, Cyclical, Irregular). :contentReference[oaicite:28]{index=28} :contentReference[oaicite:29]{index=29}
Your task → In 2 lines, explain which model suits inflation-adjusted sales with strong seasonality.
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